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Cut Compliance Costs to Improve American Competitiveness

Mr. Chairman, I believe the Commission’s regulatory strategy should be to limit government compliance costs, encourage greater supply chain efficiency, and allow American businesses to be more competitive in the global marketplace.

Adding new layers of regulatory requirements and costs on American small businesses is going in the wrong direction.

Clearly Define Harm, In Cooperation With Industry

At the Commission’s December, 2012, meeting, I outlined four general objections to the regulatory approach proposed in the draft Advanced Notice of Proposed Rulemaking considered by the Commission.

Unfortunately, I do not believe the additions and revisions to the Advanced Notice contained in the document before us address my concerns.

First, I stated that any new regulatory proposal must clearly define the harm our regulatory changes would address, in light of the standards and priorities of Executive Order 13563.

I also stated that the analysis of harm should be developed in cooperation with our stakeholders, to determine whether or not our proposals make our program more efficient and less burdensome for the shipping public.

Executive Order 13563 calls for Federal agencies to perform a Retrospective Review of Existing Rules. The purpose of the review of our significant regulations is to determine whether they should be modified to make the Commission’s regulatory program more effective and less burdensome in achieving our regulatory objectives.

The Executive Order also requires agencies to give high priority to reforms that will promote economic growth.

In the public comments on our Regulatory Review, several areas of demonstrable harm were discussed, especially regarding the inflexibility of Commission service contract filing requirements and the need to eliminate tariff filing requirements.

None of the comments mentioned the need to add additional requirements to our OTI regulations.

I do not believe that this proposal adequately justifies the need for the regulatory changes included in this package, and will make it more difficult and expensive for individuals and small businesses to become licensed and bonded.

While the staff met with two OTI organizations and the Commission was briefed by a west coast intermediary group, this document contains no changes to reflect their advice.

I recently attended a presentation by an official with the U.S. Customs and Boarder Protection Agency. She gave an example of that agency’s successful efforts in cooperating with trade and transportation stakeholders to address security problems.

In this example, three major intermediaries met for one day with Customs officials and agreed on a solution to a security problem. They implemented the solution system-wide in 30 days time.

This is an example of the government working with stakeholders to develop a workable solution to a clearly defined problem.

Regulatory Costs Clearly Defined

My second objection is that this proposal should contain a thorough review of the cost basis for any proposed user fees. Today this ANPR document still contains blanks in place of a number of new user fees to be paid by thousands of small businesses.

Are our stakeholders supposed to guess the levels of the fees? Our stakeholders must be allowed to comment on the amount of increased user fees, especially since a high user fee would make it much less likely the industry would support the proposed two-year license renewal requirement.

Finally, since the ocean transportation intermediary industry is made up of thousands of small businesses, I look forward to the Regulatory Flexibility Act Analysis for this proposal.

Quantify Harm Justifying Increased Bonding Levels

My third objection to the proposal is that it does not quantify the harm to the public that would justify raising the OTI bonding levels.

The proposal should also address whether raising the bond would deter new entrants from entering the OTI industry and adversely affect competition in the marketplace.

Annually, there are millions of ocean shipments handled by American OTIs; at least forty percent of all ocean shipments to and from the U.S. are handled by OTIs.

The relatively few cases cited in which an OTI bond was insufficient does not justify raising the bonding level.

Harmonize with Other Transportation Regimes

Changes to our OTI regulatory system related to the timing of renewals and bonding levels should be harmonized with those recently enacted by Congress in MAP-21, Public Law 112-141.

This legislation establishes a five year renewal period and a $75,000 bonding level for brokers and freight forwarders under the Department of Transportation’s jurisdiction for domestic motor carrier freight movements.

I do not believe we should create a higher bonding level and a shorter renewal time period than the recently enacted Department of Transportation levels.